USMCA takes effect Wednesday

Jun 30, 2020

The deal will provide more access for U.S. products in Canada

By Diego Flammini
Staff Writer
Farms.com

A renegotiated trilateral trade agreement comes into effect on Wednesday.

The United States-Mexico-Canada Agreement (USMCA), which the three countries signed in December 2019, will replace the North American Free Trade Agreement (NAFTA) as of July 1.

The trade deal represents a “big win” for American farmers, U.S. Agriculture Secretary Sonny Perdue said after the member nations signed the deal.

Here’s a refresher on what the USMCA means for U.S. agriculture.

Firstly, all food and ag products that had zero tariffs under NAFTA will continue to do so.

USMCA did, however, create new market access for some U.S. products.

During the negotiations, Canada conceded almost 4 percent of its supply-managed dairy sector to allow for more U.S. dairy imports.

The access covers a full range of dairy products and that access won’t be shared with other trading partners.

Canada also agreed to eliminate milk Classes 6 and 7.

The Canadian Dairy Commission created those classes to help producers market different types of protein, but it allowed low-priced products to undersell U.S. items in Canada. In addition, Canada agreed to put export penalties on certain products over specified quantity thresholds.

American farmers also received increased market access to Canada for poultry and eggs.

By year six of the USMCA, Canada will import 57,000 metric tons (MT) of U.S. chicken annually. That number will rise by 1 percent for an additional 10 years afterwards.

Also, by year six, the U.S. will export 1.67 million eggs to Canada. That figure will increase by 1 percent for the next decade too.

And U.S. turkey farmers will be able to export an additional 1,000 MT of turkey products to Canada each year for the next 10 years.

Some American crops will also benefit from the USMCA.

As part of the agreement, Canada agreed to provide imported U.S. grain with an official Canadian grade if it’s a variety that’s registered in Canada.

Prior to USMCA, any U.S. grain produced with a Canadian variety was automatically graded as feed.

The USMCA also mandates that Canada ensure British Columbia doesn’t discriminate against the sale of U.S. wine in grocery stores. And Mexico agreed not to restrict market access for U.S. cheeses with certain names.

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